The proposals keep coming: Green New Deal, Free College Tuition, Single-Payer Universal Health Care. All are super expensive and all use the same funding mechanism: higher taxes on the rich. I know many people that say “That’s ok - the rich can afford it and they don’t deserve all that money anyway. Besides, Europeans tax their rich a lot more than we do and their economies are managing just fine.” Or words to that effect.

However, the US tax system is already highly progressive - much more so than other developed countries. Yes, the top income tax rates in the US are somewhat lower than the top rates in other developed countries but we still collect more tax revenue from the rich per dollar of income. In other words, the US is already more dependent on the rich funding government than most other developed countries. That’s a problem for many reasons. For one, the income of the rich is highly volatile and not a stable source of tax revenue. For another, the rich are the investor class and we don’t want to tax them so much that they lose their enthusiasm for investing.

So how do these other countries fund their generous social programs? By making the entire populace pay for them. Check it out:

_2019 Tax Progressivity Comparison.png

To interpret: the top 10% of households in the US pay close to half the income tax revenue - much higher than the top 10% in any of the other countries. Plus, the top 10% in the US pays a greater percentage of their income in taxes than do the top 10% in the other countries.

The other countries have broad-based tax systems. Not only does the bottom 90% pay more income tax, they also pay higher consumption taxes (except for the UK) - and consumption taxes tend to be regressive, hitting the lower and middle classes much harder than the saving and investing upper classes. This may not seem fair. But it works.

Broad-based tax systems operate on the principle that everyone contributes to the common good. We’re all in this together. Sure, those at the top should pay more, but the idea is that everybody pitches in. That attitude encourages a collective problem-solving approach to government policy. More pragmatism, less ideology. More “us”, less “us versus them”.